KENILWORTH SYSTEMS CORP - Quarter Report: 2007 September (Form 10-Q)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

 

For the transition period from               to

 

Commission File Number: 0-08962

 

KENILWORTH SYSTEMS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

(516) 741-1352

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  o

State the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practical date

The number of shares of common stock, $.01 par value of the Registrant outstanding as of September 30, 2007 was 317,491,228.

 

 

Table of Contents

KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

INDEX

Part I.	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operation and Deficit — Nine months endedSeptember 30, 2007 and 2006, Three months ended September 30, 2007 and 2006, and the period, as a Development Stage Company, from inception to September 30, 2006 (unaudited)	4
	Condensed Consolidated Balance Sheets — September 30, 2007 and December 31, 2006 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows — Nine months ended September 30, 2007 and 2006, and the period, as a Development Stage Company, from inception to September 30, 2007 (unaudited)	6
	Condensed Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Part II.	Other Information	13
Item 1.	Legal Proceedings	13
Item 6.	Exhibits	13
	Signature	14

 

FORWARD LOOKING STATMENTS

The information contained in this Form 10-Q and Kenilworth’s other filings with the Securities Exchange Commission may contain “forward-looking” statements within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby. Such information involves important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward looking statements herein. Future operating results may be adversely affected as a result of a number of factors.

You should not rely on forward-looking statements in this Form 10-Q. This Form 10-Q contains forward-looking statements that involved risks and uncertainties. We use words such as “anticipates”, “believes”, “plans”, “expects”, “future”, “intends” and similar expressions to identify such forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-Q. Our actual results could differ materially from those anticipated in these forward- looking statements for many reasons, including the risks faced by Kenilworth as described below and elsewhere in this Form 10-Q.

 

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RISKS

Specific reference is made to each of the risks described in Item 7 in Part II of the Form 10-K for December 31, 2006 under the discussion “Cautionary Statement For Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and Risk Factors”. Reference is also made to future filings under Forms 10-Q and Forms 10-K and filings under the Securities Exchange Act of 1934 as amended and as may be applicable under the Securities Act of 1933 as amended.

INTRODUCTORY NOTE

The 10-Q has not been reviewed by the Company’s Independent Auditor.

This FORM 10-Q is being filed as a “Development Stage Company” from the period beginning November 24, 1998 to the present at September 30, 2007 including a charge in the amount of $4,256,926, which was the amount the Company disbursed on September 28, 1998 to be discharged from Chapter 7 Bankruptcy Proceedings.

d) The Company issued 167,764,093 shares of its Restricted Common Stock since January 1, 2002.  All of the shares may have the restrictions lifted pursuant to Rule 144 and 144K within one (1) or two (2) years which may substantially depress the trading price of the Company’s Stock in the future.

During the three (3) month period ended September 30, 2005, the Company expensed the 25,000,000 shares to be issued to Herbert Lindo, the Chairman, CEO and Chief Financial Officer at the rate of $0.05 per share.  At the Shareholders Meeting held on September 13, 2005, the Shareholders approved the issuance of 25,000,000 shares to Herbert Lindo.

At the Shareholders Meeting held on May 28, 2003, the Shareholders approved the issuance of 20,000,000 shares to be issued to Herbert Lindo the Chairman and President of the Company.  Unlike the 25,000,000 shares issuable to Herbert Lindo, which were expensed, the 20,000,000 shares were not expensed.

Herbert Lindo requested to have the 45,000,000 shares issued during the period ended March 31, 2006.  The Company expensed the 20,000,000 shares during the period at the rate of $0.015 per share, which amounted to a reduced capital adjustment of 53,652 instead of $303,652.

During the period ended March 31, 2006, the Company made certain adjustments to the number of shares outstanding which did not require capital changes.

During the quarter period ended September 30, 2006 the Company issued restricted common shares for conversion of Convertible Promissory Notes and to consultants in settlement of debt, 17,662,000 shares for $394,600.

 

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KENILWORTH SYSTEMS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE

(Unaudited)

		For the nine months ended September  30,						For the three months ended September 30,						Period from November 24, 1998 (Inception) to December 31,
		2007			2006			2007			2006			2006
Expenses
Selling, general and administrative		$	968,809		$	779,479		$	136,300		$	157,974
Net loss		$	968,809		$	779,479		$	136,300		$	157,974		$	7,607,338
Basic and diluted loss per share		$	(0.003	)	$	(0.003	)	$	(0.001	)	$	(0.001	)
Weighted average number of shares outstanding		371,491,228			253,541,133			317,491,228			$	253,541,133

 

The accompanying notes are an integral part of these financial statements.

 

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KENILWORTH SYSTEMS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

		September 30, 2007			December 31, 2006
ASSETS
CURRENT ASSETS
Cash		$	47,439		$	49,995
Prepaid expenses		—			75,000
Loan receivable		30,000			30,000
Receivable from Herbert Lindo (Note 8)		757,000			750,000
Total current assets		834,439			904,995
PROPERTY AND EQUIPMENT — NET		22,314			31,878
SECURITY DEPOSIT		9,422			9,422
TOTAL ASSETS		$	866,175		$	946,295
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	272,557		$	311,358
Payroll taxes payable		61,000			141,000
Loans payable — including accrued interest		36,186			33,787
Loans payable — automobile		—			750
TOTAL CURRENT LIABILITIES		369,743			486,895
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock - par value $.01 per share; authorized 2,000,000 shares; no shares issued and outstanding
Common stock - par value $.01 per share; authorized 500,000,000 shares; issued and outstanding 317,491,228 and 278,508,293 shares, respectively		3,174,912			2,785,082
Additional paid-in capital		31,035,226			30,419,215
Accumulated Deficit		(33,713,706		)	(32,744,897		)
TOTAL STOCKHOLDER’S EQUITY		496,432			459,400
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY		$	866,175		$	946,295

 

The accompanying notes are an integral part of these financial statements.

 

 

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KENILWORTH SYSTEMS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

(Unaudited)

		2007			2006			Period from November 24, 1998 (Inception) to December 31, 2006
Cash flows from operating activities
Net loss		$	(968,809	)	$	(779,479	)	$	(7,607,338	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation								28,431
Amortization of patent								12,795
Accretion of convertible debt discount								72,656
Beneficial conversion feature								1,452,097
Common stock issued for services								2,923,910
Common stock issued to induce debt conversion								63,276
Common stock issued for interest due on notes payable								8,501
Accrued interest transferred to capital								5,495
Other								21,100
Increase (decrease) in cash attributable to changes in assets and liabilities:
Prepaid expenses		—			230,000			(53,350		)
Loan receivable		(30,000		)	(16,000		)	(6,300		)
Accounts payable and accrued expenses		(272,557		)	(105,532		)	140,975
Payroll taxes payable		(61,000		)	54,730			16,009
Net cash used in operating activities		(605,252		)	(616,281		)	(2,142,264		)
Cash flows from investing activities
Receivable from sale of stock subscriptions (H. Lindo)		757,000			(80,000		)	(4,000		)
Proceeds from loan payable - stockholder		—			16,000			4,000
Payment of patent costs		—			(4,841		)	(73,752		)
Purchase of property and equipment		—			(62,678		)	(63,548		)
Security deposit		9,422			—			(4,250		)
Net cash used in investing activities		(266,922		)	(131,519		)	(141,550		)
Cash flows from financing activities								(1,138		)
Proceeds from loans payable - stockholders								65,000
Payment of loans payable - related parties								(127,967		)
Proceeds from loans payable - related parties								154,137
Payment of loans payable - related parties								(32,000		)
Proceeds from paid in capital		129,270			139,506			2,069,861
Proceeds from sale of common stock		257,500			625,523			132,500
Proceeds from stock subscriptions receivable								52,500
Net cash provided by financing activities		757,000			765,029			2,312,893
Net change in cash		(2,556		)	17,229
Cash- beginning of period		49,995			5,495
Cash — end of period		$	47,439		$	22,724

 

The accompanying notes are an integral part of these financial statements.

 

 

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KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Kenilworth Systems Corporation and subsidiaries (“Kenilworth”) beginning as of January 1, 2007 contain all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated balance sheets as of September 30, 2007 and December 31, 2006 and the related statements of operations and cash flows for the nine (9) month period ended September 30, 2007 and 2006.  These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on FORM 10-K.

The results of operations for the nine (9) month period ended September 30, 2007 are not necessarily indicative of the results for the entire year ending December 31, 2007.

NOTE 2 - THE COMPANY AND NATURE OF BUSINESS

Kenilworth Systems Corporation (the “Company”) was incorporated in New York in April 1968 and since exiting from bankruptcy proceedings now plans to be engaged in the business of developing and having terminals and other equipment manufactured and design systems that permit individuals from remote locations, to play along with live, in-progress casino table games via TV (simulcast) Satellite, Internet and Cable Broadcasts around the world.

The Company was in bankruptcy proceedings under Chapter 7 and 11 of the Bankruptcy Code for the period from August 28, 1982 through September 28, 1998. The Company ceased all operations, between February 2, 1991 through September 28, 1998.

NOTE 3 - PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Kenilworth Systems Corporation and its wholly owned subsidiaries: Video Wagering Systems Corporation, Roulabette™ Nevada Corporation, Kenilworth Systems Nevada Corporation, Kenilworth Systems (UK) Limited, Kenilworth Satellite Broadcasting Corporation (a Delaware Corporation) and Satellite Gaming Consultants, Inc. (a Delaware Corporation). None of these subsidiaries has any assets or liabilities, except Satellite Gaming Consultants, Inc.

NOTE 4 - RISK FACTOR AND GOING CONCERN UNCERTAINTY

As indicated in Note 2, the Company exited from Chapter 7 in September 1998 and has not yet commenced revenue producing operations. These factors create uncertainty as to the Company’s ability to operate as a going-concern and continue in business. Management plans to develop a wagering system that allows casino patrons and individuals outside the casino to play along remotely with live in-progress casino table games. The Company plans to obtain the necessary funding by offering its Common Stock, Senior Cumulative Convertible Preferred Shares and/or continue to sell Convertible Promissory Notes in private placements. There can be no assurances the Company can be successful in obtaining such financing.

The accompanying financial statements have been prepared assuming the Company is a going-concern and do not reflect adjustments, if any that would be necessary if the Company were not a going-concern.

 

 

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NOTE 5 - CONVERTIBLE PROMISSORY NOTES

 

During the quarters ended September 30, 2007 and September 30, 2006 respectively, the Company sold to various private investors $257,500 and $394,600 principal amount of Convertible Promissory Notes bearing interest at rates ranging from 4.00% to 8.00% per annum.  The Notes had a one-year term and were immediately convertible at the option of the noteholder into shares of restricted common stock based on conversion prices ranging from $.025 to $.10 per share.  All Notes issued in the quarters ended September 30, 2007 and September 30, 2006 were converted into a total of 12,822,934 and 17,662,000 common shares, respectively.

NOTE 6 - NON CASH TRANSACTIONS

Common shares issued for services

2007:

The Company issued 750,000 shares as compensation for services rendered during the second quarter period ended June 30, 2007.  The services were valued at $15,000.

NOTE 7 - INVESTMENT IN LIGHTHOUSE SUPPLIES & SERVICES, INC.

In order to operate a business in the Philippines and engage in a business relationship with the Philippine Amusement and Gaming Corporation (PAGCOR), we purchased Lighthouse Supplies & Services, Inc (Lighthouse) for US$60,000.  The previous owners, all citizens of the Republic of the Philippines, agreed to continue to serve as directors representing fifty-one percent (51%) with Kenilworth directors representing forty-nine percent (49%) of the Board.  The Philippines Directors were to receive annual compensation for their services.  In order to conserve cash, the Company cancelled the Lighthouse purchase and expensed the $60,000 payment.

NOTE 8 - PAYROLL TAXES PAYABLE

The Company has made arrangements with the Internal Revenue Service (IRS) and the New York State Department of Taxation to pay approximately $141,000 in past due payroll taxes, including all penalties and interest accrued during the years 2006 and 2005, in monthly installments.  The agreements provide that the Company must pay all present taxes, when due, and payments must remain current in 2007.  On October 25, 2007 the Company reduced the IRS payroll liability by $80,000.  The Company is paying monthly all past due state payroll taxes.

NOTE 9 - RECEIVABLE FROM HERBERT LINDO

On November 27, 2006 Herbert Lindo, the Chairman and Chief Executive Officer exercised a five million (5,000,000) share option for seven hundred fifty thousand dollars ($750,000) at fifteen cents ($0.15) per share pursuant to the Company’s Performance and Equity Plan. The price per share was the price for the Option which would have expired on the following date. Mr. Lindo does not own any other Options pursuant to the Plan. The average market price of the Common Stock for the thirty (30) days prior to November 27, 2006 was high: $0.05, low: $0.03. As provided in the Plan, Herbert Lindo borrowed the seven hundred fifty thousand dollars ($750,000) from the Company and pledged the five million (5,000,000) and other shares he owns, as collateral for the loan. The five million (5,000,000) shares have been issued as restricted shares.  Mr. Lindo increased his indebtedness by an additional $7,000 during the third quarter.

NOTE 10 - SUBSEQUENT EVENTS

Subsequent to September 30, 2007, the Company received $40,000 in transit from the sale of Convertible Promissory Notes.

 

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

Since we emerged from bankruptcy proceedings on September 23, 1998 we have had no revenues from operations. We sustained substantial losses from general administrative expenses amounting of $850,079 and $3,815,302 in year 2006 and 2005 and for the nine-months ended September 30, 2007 we sustained a loss amounting to $968,809 compared to a loss of $779,479 for the nine month period ending September 30, 2006. Kenilworth has had no revenues from operations during the past fifteen (15) years and there can be no assurances that it will ever have revenues from present planned operations.

LIQUIDITY AND CAPITAL RESOURCES

Our present plans are to develop a wagering system dubbed “Roulabette™” that would allow patrons in the industrialized world to play and wager on live in-progress simulcast casino table games on TV’s placed in hotels, resorts, bars, cafés and other public gathering places and in homes and offices on personal computers (PC’s) or television sets connected to TVs via digital satellite, digital cable and Internet broadcasts emanating from strictly regulated casinos.

PART II

ITEM 1—DESCRIPTION OF BUSINESS

Kenilworth Systems Corporation hereinafter referred to as “Kenilworth”, the “Company” or “we”, was incorporated on April 25, 1968 under the laws of the State of New York.  Kenilworth has been a publicly traded Company since August 1968 formerly on the National NASDAQ Market, presently on the OTC Pink Sheet Market since exiting from bankruptcy proceedings in September 1998.  Kenilworth is now being presented as a Development Stage Company.

GENERAL

Since early in the year 2000 we have been solely engaged in developing patents, markets and investigating how best to obtain Governmental approvals, by engaging lobbyists and consultants that would allow television satellite and cable subscribers throughout the industrialized world to play and wager along from remote locations with live, in-progress casino table games (Roulette, Craps, Baccarat and more) from strictly regulated casinos located in the United States and other locations around the world.

Employing the latest encrypted satellite, cable and Internet technology and placing television cameras in strategic locations above the casino table games, without disrupting the normal game-monitoring activities, (a separate control room would direct the various camera angles), and transmitting the table games over the digital satellite, digital cable and Internet networks (in countries that permit Internet wagering) to television sets (“TV’s”), which become a platform for playing along with the casino games wherever TV’s are located.

Kenilworth titled the overall project “Roulabette™”.  There are thirty-eight million (38,000,000) satellite and seventy-three million (73,000,000) cable TV subscribers in the United States and more than five hundred million (500,000,000) subscribers throughout the rest of the industrialized world (“The Market”).  On average, households in the U.S. have three (3) TV’s.  (It is important since the satellite and cable companies will charge a separate fee for transmitting the table games).  Public gathering places can accommodate (be able to network) up to one thousand (1,000) or more TV sets with a single satellite receiving dish, direct cable connections, or streamed via the Internet.  With wagering possible in homes, hotel rooms, resort rooms, pubs, restaurants, cafés, race tracks and other public gathering places, the Company believes it will become a more than $500 billion net win Market within five (5) years throughout the industrialized world (by the year ended 2012).

 

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To best market the casino games, the Company is selecting lotteries throughout the world to manage and operate the distribution and cash handling (deposits to play and paying winnings) using the lotteries’ existing databases for the sale of lottery tickets, and paying winnings at regular lottery licensed terminal locations.

All forty-three (43) lotteries in the United States are owned and operated by County and State agencies.  Since the beginning of year 2007, Texas, Illinois, Indiana, Maryland, Michigan, Iowa, New Jersey and California are exploring the privatization of their lotteries. This could greatly enhance our efforts to broadcast the live casino table games to these lottery locations and could result in having Cafés that offer terminals and TV sets to play along.  Internet Cafés that offer wagering on various events have been a huge success in the Asian Market. With Internet wagering outlawed in the United States, our patented satellite, one-way broadcasts offer the best possibility to establish satellite Cafés.

Throughout the rest of the world, lotteries are owned by government agencies or non profit charitable agencies that distribute the net earnings to benefit social and charitable programs, or by private entities that pay a percentage of their net win to designated government agencies.

These foreign lotteries also have the same databases as lotteries in the United States, except most lotteries throughout Europe pool their lotteries between countries, not unlike Mega Millions and PowerBall in the United States, which makes the distribution simpler and very cost effective for both Kenilworth and the lotteries.

There are no technical breakthroughs required.  The equipment for the technology is readily available.  What is needed is to get through the maze of Local, County, State and Federal regulations in each U.S. State and foreign countries.  When the first State in the United States grants the Company permission to transmit the broadcast from one of its casinos to their residents and to States that do not have any casinos, (the entire East coast of the United States), the other forty-three (43) States with lotteries will join expeditiously. The same will occur in foreign countries.

Kenilworth will share the net win revenue with all participating entities that provide Roulabette™ gaming without costs of any kind.  State lotteries or their private operators will receive a minimum of forty percent (40%) of the total net win from their respective jurisdictions.

In States and foreign countries that designate exclusively lottery proceeds to schools and their teachers it is a welcome contribution.  It also will help close budget gaps.

In addition, throughout the United States and most foreign countries there are hundreds of facilities that simulcast live in-progress horse/dog races.  At most facilities there are several large TV screens that show the races from the different tracks with general theater-type seating for patrons and at private cubicles with television sets outfitted with touch screens.  The cubicles rent for additional fees.  After players open an account and select pin numbers, they can watch, in privacy, each race offered on the different tracks on the TV and place wagers on the different races by simply changing channels.  The players may also watch sporting events, the news, the stock market reports, and in the near future Roulabette™, live, in-progress casino table games.  The simulcast centers have their own databases to manage the cash deposit and pay winnings on the horse/dog races and will be able to manage the casino games, on the same methods as the lotteries will manage Roulabette™.  With private TV’s, available in simulcast centers, especially at night, when fewer tracks are operating.

When playing along with live table games from a highly regulated jurisdiction, players will be assured that the game results are exactly what they see; and, playing along with live casino table games such as Roulette, Craps and Baccarat, we believe, will provide interaction, fun and far more excitement than playing make believe animated (virtual) games. It is the next best thing, we believe, to actually being at the table in the casino.

To conduct permanent broadcasts Kenilworth believes it will require a minimum of ten million dollars ($10,000,000) and there are no assurances we will ever be able to obtain such money. At present, the Company does not have the funds readily available but hopes to obtain same, from investors, as soon as

 

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Kenilworth can commence broadcasting from a casino in the United States or other casinos throughout the world.

In prior years, Kenilworth completed a prototype system that allowed casino patrons to play along with live in-progress casino table games only within the confines of a casino, via closed circuit television. Also in 1990, we developed and delivered for the TAB (Totalizator Agency Board) then a quasy government agency of the State of Victoria, Australia, a cashless slot machine system. Both systems required debit cards and central mainframe computers to manage the wagers. By making use of the expertise applied in the development of the aforementioned systems we plan to develop a second-generation system that will broadcast the live casino table game action via the airways. This as planned would allow a player in an interactive manner, at a remote location (outside the casino confines), to experience the actual play and excitement at the casino table game and to make wagers on the various games, without having to be physically present at the casino or casino table.  There are no assurances we will be able to successfully develop any system.

We also propose for slot machine manufacturers to develop “Roulabette™ Slot Machines”.  The Roulabette™ Slot will offer the regular slot or video lottery games and by the touch of a button, the live in-progress casino table games.  Slot players are offered a change of pace at the cost of a slot handle pull.  The games are transmitted to the Roulabette™ Slot via satellite, airways or the Internet (all broadcasts are encrypted to prevent unauthorized use of the broadcasts).

Where authorized, hotels, resorts, clubs, cafés and other public gathering places will be able to offer casino table game action in their establishments without incurring the costs to operate a casino. There are now believed to be more than ten million (10,000,000) slot machines played throughout the world, outside of casino confines.

 

Roulabette™ is a concept intended to be built and there can be no assurances that it will ever be built.

 

New Gaming Enforcement Law

 

The Internet Gambling Prohibition and Enforcement Act of 2006, signed into law by President Bush on October 13, 2006, will not prohibit but rather enhances the Company’s proposed Roulabette™ System of playing along remotely with live casino table games. We deal with cash only.

 

Internet gambling was always outlawed in the U.S. Las Vegas lobbied to make it legal to allow casino players to wager, from home or other remote locations, directly with the casino of their choice. With the credit card prohibition, that appears to become improbable. Roulabette™ will be primarily deployed in conjunction with Lottery Systems. Digital satellite and cable subscribers will be able to go to their local lottery agents and make cash deposits and/or collect winnings, in the same manner as if they are purchasing lottery tickets, using pre-encoded ‘Roulabette™ Play Cards’ inserted in the lottery terminals. Our basic patent encompasses remote satellite broadcasts and a pending application is directed to having exclusively state lotteries and other authorized public agencies manage all the cash handling and distribution. Using lotteries, that can only by law, accept cash deposits, concerned citizens and legislators will be assured that the high school student and college freshman will not be able to participate. By using the lotteries database, the compulsive gambler can be identified and, if necessary, limited or shut down. The additional revenue collected from the lottery will be available to fund state activities such as boost school aid and teacher’s salaries.

 

If Kenilworth is permitted to broadcast the live game action from a Las Vegas casino, state and federal government agencies will earn and collect the substantial income that formerly was earned illegally by overseas operators.

 

Unless an alternative is found, the illegal wagering may not stop. Determined players will find other means to make their deposits and continue to wager with their foreign providers. If the U.S. resident gamers have legal access for their casino and sports betting habits, the foreign operators will cease to exist. Their prime market was, and may remain, the U.S. resident.

 

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Roulabette™ action is designed to offer entertainment, not hardcore gambling.

 

It is a practical solution to most illegal gambling. The Roulabette™ System is identical to simulcasts of horse and dog racing. The wagering takes place at the receiving locations, lotteries, homes, religious organizations that conduct Nevada nights using rented terminals provided by Kenilworth, not at the remote casino locations.

 

The Roulabette™ program will include entertainment and commentators (much like commentators of sporting events and poker tournaments) to assist players with the rules and regulations of the games. Live casino table game action may also be offered on slot machines and video lottery terminals, as an alternative and change of pace from native games.

 

To best market the casino games, the Company is selecting lotteries throughout the world to manage and operate the distribution and cash handling (deposits to play and paying winnings) using the lotteries’ existing databases for the sale of lottery tickets, and paying winnings at regular lottery licensed terminal locations.

All of our patents, filed in the forty-nine (49) industrialized countries in the world, provide for transmitting remote, live in-progress casino table games via telephone lines, Internet and satellite (satellite primarily for the U.S. market) and the airways (cell phone wagering).  Using broadband, Internet is simpler and more economical to operate than using satellite transmission.

Roulabette™ offers content to the broadcasting industry and a medium for local and international advertisers.

According to Wang Xuehong, head of the China Center for Lottery Studies of Beijing University, revenue form legal lotteries in China in 2005 reached 70 billion Yuan ($87.5 billion US dollars).

We have two (2) U.S. patents pending using lottery terminals to manage the wagering.  The patents have been published and filed with our other patents throughout the forty-nine (49) countries.  It may become the incentive needed for the Chinese Government to permit our live, in-progress table games from a casino in Macau.

In order to gain a break through the maze of regulations we just need to demonstrate the viability of Roulabette™,  initially without participating in actual gambling.  Similar to poker tournaments that are offered for viewing only.

If governments cannot control illegal gambling, why not make it legal and allow the various government agencies share in the net win revenue.

 

12

 

PART II.
OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS:

None

Item 2.    CHANGE IN SECURITIES:

None

Item 3.    DEFAULT UPON SENIOR SECURITIES:

None

Item 4.    SUBMISSION OF A MATTER TO A VOTE OF SECURITIES HOLDERS:

None

Item 5.    OTHER INFORMATION:

The Company plans to hold its Annual Meeting of Shareholders in January 2008 or any adjournment thereof with proxy materials mailed to shareholders of record  prior to the proposed meeting dates.

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K:

Ex 31.1 Certification of Chief Financial Officer of the Company Required by Rule 13a-14(a) or Rule 15d-14(c) of the Exchange Act

Ex 32.1 Chairman and Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized.

	KENILWORTH SYSTEMS CORPORATION
By:	/s/ Herbert Lindo
	Herbert Lindo,
	President and Chief Financial Officer
	November 12, 2007

 

 

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